This breakfast briefing will take a look at the outlook for the risk reduction market - looking in particular at how schemes can best prepare to conduct an insurance transaction, capacity in the market as well as the key factors that are likely to affect both pricing and demand.

Professional Pensions Investment Conference has gathered a great following and is a widely respected event which brings together senior decision makers within public and private sector pension schemes.

So far, DC plans have largely been focused on the onset of auto-enrolment and changes to the regulatory framework - be it the ‘charge cap,' ‘pension freedoms' or consultations around ‘value for money', says Annabel Tonry, Executive Director at J.P. Morgan Asset Management (JPMAM).

In 2015 George Osborne, then the UK Chancellor of the Exchequer, decided that those age over 55 could take much more of their pension in cash. This has since opened up a range of possibilities for DC scheme members in the world of pensions.

Schemes urge managers to join UNPRI

Asset managers should be encouraged, but not required, to sign on to the United Nations Principles for Responsible Investments, delegates at the Pension Fund Forum Denmark heard.

Ole Buhl, senior socially responsible investment adviser at Danish pension fund manager ATP said the scheme has started asking its managers to sign on to the UNPRI. He said: “We have started to ask all the managers we employ to sign up to the UNPRI. If they say no, we may go ahead with them anyway. But generally we’ve been pretty successful.”The UNPRI are a series of guidelines that outline how to incorporate environmental, social and governance issues into investment practices. They call for investors to make a commitment to be active owners and incorporate ESG into ownership policies and to promote acceptance of the principles among the industry. Danish pension funs have embraced the Principles. A recent report by Aberdeen Asset Management showed that there were more PRI signatories in Denmark than in the UK, Europe’s largest pension market. Meanwhile, the number of Nordic pension funds with an ESG policy in place totalled 87%.But Cathrine de Coninck-Smith, governance and responsible investment analyst at Threadneedle Asset Management, said merely signing the UNPRI does not go far enough. “For asset owners, just asking us to sign up to the UNPRI is not enough. There has to be some sort of engagement along the way as well. What’s very powerful from our perspective is when that engagement is with the fund manager and the SRI team, because in some cases, the two are separate,” she said. “As simple as it is, asking for an annual report or semi-annual report on engagement activity is valuable because that drives real change. Even though the UNPRI are powerful principles, there has to be further encouragement,” added Coninck-Smith. However, Buhl said he was hesitant to go further. “We don’t want to ask asset managers for more than just signing the principles. We do agree that these principles are possible to address in different ways, but actually, that’s the great thing about them,” he said. While each of the pension fund speakers took a unique approach to SRI, all agreed managers should not be forced into signing the principles. “It shouldn’t be a requirement. It should be about promoting the acceptance of the principles. As they are not operational, I don’t see the necessity to put it up as a requirement. However, what I find very valuable... is to inform the asset managers about our codes,” said Kristin Parello-Plesner, corporate and social responsibility manager at PFA Pension. She said often, the managers are already engaging with companies the pension fund flags up to them. Rasmus Juhl Pedersen, SRI advisor at PBU, the pension fund for early childhood teachers, said he does not require managers to sign on to the UNPRI, as the pension fund itself is not a signatory. “At this point, since we don’t require this from ourselves, it does not make sense to require this of our managers. Of course we try to mirror ourselves on the principles,” he said. PBU uses F&C Asset Management as an ESG overlay provider that conducts research on the companies within the scheme’s portfolio. “Many asset managers are moving at this point towards ESG integration, but it’s far from mainstream. We don’t want to restrict the number of managers we work with so...it’s very much up to the asset managers themselves how to integrate ESG. That’s why we have an overlay,” he said.